With a Federal Election on the horizon, the Government has made sure this year’s Budget has something for everyone.  

It has also taken care to act on issues that were raised in the recent Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industryannouncing a range of reforms aimed at ensuring Australians are protected. With Treasurer Josh Frydenberg announcing a number of proposed measures on the superannuation front, we’ve highlighted those we think are most relevant to our members. 

Changes to super for those aged 65 and above  

The Government has announced a raft of super measures for Australians aged 65 and above. Mr Frydenberg said these proposed changes will help Australians boost their retirement savings by giving them greater flexibility as they near retirement.

The proposed change 

Australians aged 65 and 66 to be exempted from the contributions ‘work test’. 

Proposed effective date: 1 July 2020 

What it means 

If you’re aged 65 and 66, you will be able to make voluntary contributions, both concessional and non-concessional, without meeting the work test. 

Currently, a person over the age of 65 can only make ‘voluntary’ contributions (including personal contributions and non-mandated employer contributions) if they work a minimum of 40 hours over a 30-day period. 

This Government estimates that there are around 55,000 Australians aged 65 and 66 who will benefit from this change in 2020-21.

The proposed change 

Australians aged 65 and 66 to be allowed to access the ‘bring forward’ rules for non-concessional contributions 

Proposed effective date: 1 July 2020 

What it means 

At the moment, the bring forward rule allows those under the age of 65 to make up to three years’ worth of non-concessional contributions (which are otherwise capped at $100,000 a year) in one year. 

The change means Australians aged 65 and 66 will now be able to access the ‘bring forward’ rule and make up to three years’ worth of non-concessional contributions in one year. 

Things you can do 

There are still a number of other eligibility conditions that apply to the bring forward rule. You can learn more about them, and how they may apply to you, via the ATO here. 

The proposed change 

Increase of the age eligibility limit for spouse contributions to 74 years. 

Proposed effective date: 1 July 2020 

What it means

Currently, Australians aged 70 years and over can’t receive contributions made by another person on their behalf.  The Government has announced it is increasing the age limit to 74 years. However, they will still need to meet the work test if aged over 66.

Things you can do 

Keep an eye out for more information from us as the Government begins to change the regulations to implement this measure.

Greater advocacy for consumers

With the recent Royal Commission into Misconduct in the Banking Superannuation, and Financial Services Industry identifying a multitude of issues, the Budget includes more than $600 million in funding over five years for measures to address the problems. While most measures are aimed at industry, we have highlighted one that may be of particular interest to members.

 

The proposed change

The Government will explore the establishment of a Superannuation Consumer Advocate. 

What it means 

The government will provide funding to undertake an expression of interest process to identify different options to support the establishment of a Superannuation Consumer Advocate. 

The Advocate would provide input on behalf of consumers in policy discussions, and provide information to educate and assist consumers to navigate the superannuation system. 

Recognition of the Protecting Your Super package

The Government announced a number of reforms as part of its Protecting Your Super package in its 2018 budget. Not all those measures have passed into law, however a few have and will be coming into effect on 1 July 2019.  

Changes coming into effect

  1. Super funds will have to transfer ‘inactive’ accounts with balances under $6,000 to the Australian Taxation Office (ATO). The ATO must then consolidate your accounts on your behalf within 28 days of identifying your ‘active’ account.
    Effective date: 1 July 2019
  2. A 3% annual cap on administration and investment fees will apply to accounts with a balance of $6,000 or less. Super funds will no longer be able to charge you an exit fee for leaving their fund.
    Effective date: 1 July 2019
  3. Insurance will be removed on accounts where no transactions have occurred for 16 months, unless the member opts-in.
    Effective date: 1 July 2019
     

What it means

An inactive account is one that hasn’t received a contribution in the last 16 months. If you have super accounts with a number of super providers, these measures are designed to help you bring your accounts together – potentially saving you fees. 

Things you can do 

Call us to see if you’ve got an inactive account. You may decide you don’t want it transferred to the ATO. Call us to see if you’ve got an inactive account. You may decide you don’t want it transferred to the ATO. 

The proposed changes

Insurance will be provided through an opt-in arrangement for accounts of less than $6,000 and new super members under the age of 25.

These proposals have not yet been passed.   

What it means

Australians under the age of 25 with super accounts, and Australians with super accounts of less than $6,000, will have to opt-in to receiving insurance cover through their superannuation fund. 

Beyond super

With Treasurer Josh Frydenberg projecting $45 billion in surpluses over the next four years, the Government announced billions of dollars in tax cuts for middle income earners across Australia.  

The proposed change

If the Coalition wins re-election, it will introduce income tax cuts. 

What it means

If re-elected, the Coalition will introduce income tax cuts of up to $1080 a year for three financial years from 2018-19 for Australians earning between $48,000 and $90,000. 

If re-elected, the Government will also cut taxes for middle and high-income earners from 2024 by flattening tax brackets, so those earning between $45,001 and $200,000 will pay a marginal rate of 30%. Workers in this range currently pay a top marginal rate of either 32.5%, 37%, or 45%. 

How the income tax cuts stack up

It’s important to remember that many of these policies will need to be passed by Federal Parliament before they come into effect. This might mean that the details of some of these measures could change. We’ll make sure to update you if they are finalised or significantly changed.

We're here to help

If you need help with making a decision about your super, you can get simple advice over the phone or face to face. It’s included as a part of your membership so there’s no extra cost.